Municipal insurer defends ‘secret agreement’ to move debt, assets

CONCORD — HealthTrust — a municipal insurer funded by taxpayers and public employees — is objecting to state regulators’ attempt to strip it of its status to operate as a pooled risk management program for allegedly reorganizing through “secret agreement.”

CONCORD — HealthTrust — a municipal insurer funded by taxpayers and public employees — is objecting to state regulators’ attempt to strip it of its status to operate as a pooled risk management program for allegedly reorganizing through “secret agreement.”

Representing HealthTrust, which was formerly part of the now-defunct Local Government Center, is attorney Michael Ramsdell. He filed an objection Tuesday claiming hearings officer Donald Mitchell lacks jurisdiction over the state’s “procedurally improper attack” on the so-called secret agreement, because it presents new facts that should be subject to a new hearing.

The proceeding, over which Mitchell presided, concluded with one exception which is the opportunity to litigate legal fees, Ramsdell argues.

“That proceeding is otherwise over,” he argues.

The Bureau of Securities Regulation alleges that when HealthTrust agreed with an affiliated Property Liability Trust to move the PLT’s debts and assets into the HealthTrust pool, both violated Mitchell’s order stating the pools must be separate entities with separate governing boards.

“This was accomplished by a secret written agreement signed in October 2013 by the chairmen of their respective boards,” according to the BSR’s announcement last week. “The agreement was only revealed to the Bureau and the public on January 10, 2014. The secret agreement violates the express provisions of the Mitchell Order by once again consolidating multiple risk pools with conflicting interests under a single board.”

Ramsdell counters that the risk pools complied by becoming separate entities and that the law allows different coverage lines within separate pools. He claims the transfer of PLT money and debt to the HealthTrust pool was necessary because the PLT didn’t have $17.1 million it was ordered to repay HealthTrust for a failing worker’s compensation program.

Senate President and HealthTrust executive director Peter Bragdon said in a memo to members on Tuesday that PLT had only $12.2 million and if it didn’t move its assets and debt into the HealthTrust pool, it would have been rendered insolvent by Mitchell’s order. Bragdon also notified members that the PLT was unable to borrow the money.

If the BSR is successful in stripping HealthTrust of its status as a risk management pool, it would subject the health insurance pool to state insurance regulations and state taxes, from which it’s currently exempt, announced BSR attorneys Andru Volinsky and Roy Tilsley.

Bragdon said, “The HealthTrust board acted on advice it received from independent legal counsel with expertise in New Hampshire insurance and finance regulations to accomplish these goals. HealthTrust believes its actions, when brought before an independent arbiter, will be found to be in full compliance.”

State officials say they received complaints about HealthTrust’s absorption of the millions in PLT debt, including by written correspondence from the towns of Stratham and North Hampton.

The BSR asks a hearings officer to find HealthTrust in violation of Mitchell’s 2012 order and to order it to cease violating the order or be stripped of its legal right to operate as a risk pool in the state of New Hampshire.

The recent Supreme Court order upheld Mitchell’s order saying the LGC must refund $52 million it overcharged for health insurance in the past and continue to refund surplus money in the future. The 21-page order by the state’s highest court also found that the LGC violated law by “purporting” to issue refunds in the form of insurance rate stabilization, instead of by cash or credit.